Homebuyers seized the opportunity to lock in lower interest rates last month, with pending home sales leaping 6.1%. It was the largest month-over-month increase since December 2023, according to a report from the National Association of Realtors (NAR).
“Homebuyers are acutely sensitive to even minor fluctuations in mortgage rates,” NAR Chief Economist Lawrence Yun stated. “While contract signings are not a guarantee of eventual closings, the solid rise in pending home sales implies a sizable buildup of potential homebuyers, fueled by ongoing job growth.”
Fixed-rate mortgages with a 30-year term hovered in the range of 6.63% to 6.67% in March after reaching a year-to-date high of 7.04% during the week of January 16, according to Freddie Mac.
The South region had the largest percentage of residents jumping into the homebuying waters in March, with pending sales rising 9.8% last month. The Midwest saw a 4.9% monthly increase in pending home sales, while the West region rose 4.8%. In an outlier, pending sales in the Northeast declined 0.5% in March.
Yun noted that March typically sees a thaw in the housing market following the coldest-weather months.
“Consumers should note that the spring homebuying season typically brings in a surge of homebuyers and sellers compared to the winter months,” Yun said. “In March, signed contracts surged 34.1% from February based on non-seasonally adjusted raw data, reflecting a pattern consistent with previous years. In addition, inventory levels rose by 8.1% in March from the prior month, indicating a more dynamic housing-market environment.”
On a year-over-year basis, overall pending home sales were down 0.6% in March. Regionally, the Midwest had a 1.4% increase compared to March of 2024. The other three regions experienced yearly declines, with the Northeast falling 3%, the West declining 2% and the South down 0.4%.
Odeta Kushi, deputy chief economist at First American Financial Corp., weighed in on the spike in pending home sales in March, observing that higher inventory levels offered buyers more choices.
“Although pending home sales are slightly down compared with last year, the month-over-month bounce is a step in the right direction,” Kushi said in a statement provided to Scotsman Guide.
However, Kushi added that “despite this cautious optimism, the recent increase in rates and ongoing economic uncertainty may temper this momentum.”
